Doubts about NSW’s huge infrastructure spending plans have kept the state’s credit rating on a negative outlook but it has, for now, avoided a downgrade like Western Australia’s last month.

In reaffirming the state’s AAA, Standard & Poor’s praised the state government for using proceeds of the $5 billion sale of Port Botany to pay off debt and for new infrastructure. Victoria is the only other state to retain an AAA rating.

The credit ratings company expressed concern about the O’Farrell government’s plans for huge projects such as the $11 billion WestConnex motorways and the $10 billion North West rail line.

“The state may incur significant additional debt to address its infrastructure backlog, which we consider would pressure the ratings," it said.

The government plans an innovative approach for the WestConnex, building it in stages, imposing tolls and using the income to sell the asset to finance the next stage.

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S&P expressed concern over NSW’s ability to deliver the projects on time and budget and feared it might end up owing more debt than it expected.

“The state’s large capital program is at an early stage . . . and while we consider that settings for better planning have been put in place, we consider that their ­effectiveness is yet to be fully evidenced," it said.

It also said the state could struggle to curb operating expenses enough to balance the extra debt burden for infrastructure.

A negative outlook means there is a one-in-three chance of a downgrade in the next two years.

Treasurer
Mike Baird
said keeping the AAA was an endorsement of the state’s financial ­management and acknowledged there was still work to do.

“The fact that NSW remains on negative outlook is confirmation that we continue to face difficult financial circumstances," he said.

NSW hopes to sell the remaining 60 per cent of the state’s power generation assets in coming months.